NOW SWOT Analysis / Matrix

Essays, Term Papers & Research Papers

SWOT analysis is a strategic planning tool that can be used by NOW managers to do a situational analysis of the firm . It is a useful technique to evalauate the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) NOW is facing in its current business environment.

The NOW is one of the leading companies in its industry. NOW maintains its prominent position in market by critically analyzing and reviewing the SWOT analysis. SWOT analysis a highly interactive process and requires effective coordination among various departments within the organization such as – marketing, finance, operations, management information systems and strategic planning.

The SWOT Analysis framework facilitates an organization to identify the internal strategic factors such as -strengths and weaknesses, & external strategic factors such as - opportunities and threats. It leads to a 2X2 matrix – also called SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix helps the managers of the NOW to develop four types of strategies:

SO (strengths-opportunities) Strategies

WO (weaknesses-opportunities) Strategies

ST (strengths-threats) Strategies

WT (weaknesses-threats) Strategies

SWOT Matrix Strategies Objective

The central purpose of SWOT matrix is to identify the strategies that an organization can use to exploit external opportunities, counter threats, and build on & protect NOW strengths, and eradicate its weaknesses.

Step by Step Guide to NOW SWOT Analysis

Strengths of NOW – Internal Strategic Factors

As one of the leading organizations in its industry, NOW has numerous strengths that help it to thrive in the market place. These strengths not only help it to protect the market share in existing markets but also help in penetrating new markets. Based on Fern Fort University extensive research – some of the strengths of NOW are –

Strong dealer community – It has built a culture among distributor & dealers where the dealers not only promote company’s products but also invest in training the sales team to explain to the customer how he/she can extract the maximum benefits out of the products.

Highly successful at Go To Market strategies for its products.

Superb Performance in New Markets – NOW has built expertise at entering new markets and making success of them. The expansion has helped the organization to build new revenue stream and diversify the economic cycle risk in the markets it operates in.

Highly skilled workforce through successful training and learning programs. NOW is investing huge resources in training and development of its employees resulting in a workforce that is not only highly skilled but also motivated to achieve more.

Strong Free Cash Flow – NOW has strong free cash flows that provide resources in the hand of the company to expand into new projects.

Automation of activities brought consistency of quality to NOW products and has enabled the company to scale up and scale down based on the demand conditions in the market.

Strong distribution network – Over the years NOW has built a reliable distribution network that can reach majority of its potential market.

High level of customer satisfaction – the company with its dedicated customer relationship management department has able to achieve a high level of customer satisfaction among present customers and good brand equity among the potential customers.

Weakness of NOW – Internal Strategic Factors

Weakness are the areas where NOW can improve upon. Strategy is about making choices and weakness are the areas where a firm can improve using SWOT analysis and build on its competitive advantage and strategic positioning.

High attrition rate in work force – compare to other organizations in the industry NOW has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.

There are gaps in the product range sold by the company. This lack of choice can give a new competitor a foothold in the market.

Days inventory is high compare to the competitors – making the company raise more capital to invest in the channel. This can impact the long term growth of NOW

Limited success outside core business – Even though NOW is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.

The marketing of the products left a lot to be desired. Even though the product is a success in terms of sale but its positioning and unique selling proposition is not clearly defined which can lead to the attacks in this segment from the competitors.

The company has not being able to tackle the challenges present by the new entrants in the segment and has lost small market share in the niche categories. NOW has to build internal feedback mechanism directly from sales team on ground to counter these challenges.

The profitability ratio and Net Contribution % of NOW are below the industry average.

Opportunities for NOW – External Strategic Factors

Government green drive also opens an opportunity for procurement of NOW products by the state as well as federal government contractors.

New environmental policies – The new opportunities will create a level playing field for all the players in the industry. It represent a great opportunity for NOW to drive home its advantage in new technology and gain market share in the new product category.

The new technology provides an opportunity to NOW to practices differentiated pricing strategy in the new market. It will enable the firm to maintain its loyal customers with great service and lure new customers through other value oriented propositions.

The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as NOW to increase its profitability.

New customers from online channel – Over the past few years the company has invested vast sum of money into the online platform. This investment has opened new sales channel for NOW. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.

Stable free cash flow provides opportunities to invest in adjacent product segments. With more cash in bank the company can invest in new technologies as well as in new products segments. This should open a window of opportunity for NOW in other product categories.

New trends in the consumer behavior can open up new market for the NOW . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.

Decreasing cost of transportation because of lower shipping prices can also bring down the cost of NOW’s products thus providing an opportunity to the company - either to boost its profitability or pass on the benefits to the customers to gain market share.

Threats NOW Facing - External Strategic Factors

As the company is operating in numerous countries it is exposed to currency fluctuations especially given the volatile political climate in number of markets across the world.

The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.

New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.

Rising raw material can pose a threat to the NOW profitability.

Intense competition – Stable profitability has increased the number of players in the industry over last two years which has put downward pressure on not only profitability but also on overall sales.

Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of NOW

Imitation of the counterfeit and low quality product is also a threat to NOW’s product especially in the emerging markets and low income markets.

Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.

Limitations of SWOT Analysis for NOW

Although the SWOT analysis is widely used as a strategic planning tool, the analysis does have its share of limitations.

Certain capabilities or factors of an organization can be both a strength and weakness at the same time. This is one of the
major limitations of SWOT analysis
. For example changing environmental regulations can be both a threat to company it can also be an opportunity in a sense that it will enable the company to be on a level playing field or at advantage to competitors if it able to develop the products faster than the competitors.

SWOT does not show how to achieve a competitive advantage, so it must not be an end in itself.

The matrix is only a starting point for a discussion on how proposed strategies could be implemented. It provided an evaluation window but not an implementation plan based on strategic competitiveness of NOW

SWOT is a static assessment - analysis of status quo with few prospective changes. As circumstances, capabilities, threats, and strategies change, the dynamics of a competitive environment may not be revealed in a single matrix.

SWOT analysis may lead the firm to overemphasize a single internal or external factor in formulating strategies. There are interrelationships among the key internal and external factors that SWOT does not reveal that may be important in devising strategies.

Weighted SWOT Analysis of NOW

In light of the above mentioned limitations of the SWOT analysis / matrix, corporate managers decided to provide weightage to each internal strength and weakness of the firm. Organizations also assess the likelihood of events taking place in the coming future and how strong their impact could be on company's performance.

This method is called Weighted SWOT analysis. It is better than doing simplistic SWOT analysis because with Weighted SWOT Analysis NOW managers can focus on the most critical factors and discount the non-important one. It also solves the long list problem where organizations ends up making a long list but none of the factors deemed too critical.

Limitation of Weighted SWOT analysis of NOW

This approach also suffers from one major drawback - it focus on individual importance of factor rather than how they are collectively important and impact the business holistically.